EXPECT more rice—and consequently, lower prices—in the market starting this July, as the government has allowed the private sector to import another 805,200 metric tons (MT) of the staple under the minimum access volume (MAV) scheme of the World Trade Organization.
The National Food Authority (NFA) released last Friday a copy of the general guidelines for the importation of 805,200 MT under MAV by the private sector.
Under the guidelines, the NFA has divided anew the arrival of the whole volume into two phases: The first tranche will come in starting July until August 31, 2018, while the remaining volume should be imported from December 20 to February 28, 2019.
The NFA Council decided on this timeline so as not to affect the farm-gate price of palay during the harvest season, according to NFA Deputy Administrator Judy Carol Dansal.
“It’s always like that. Because during those periods there [is] no harvest anymore, so it also serves as a protection for our farmers,” she told the BusinessMirror.
“That is good because we will have a lot of rice supply in the market, and it may bring down the prices. It has been programmed that the arrival of the [MAV] rice imports would not be during the harvest time,” she added.
The Philippine Statistics Authority said the retail price of regular-milled rice as of second week of May reached P40.19 per kg, which was 7.52 percent higher than the P37.38 recorded quotation a year ago.
Dansal explained that the NFAC decided to open another round of MAV as part of the Philippines’s commitment to WTO member-countries to retain its concessions as stipulated under Executive Order 23 (EO 23) of the President while the country is undertaking the tariffication of its rice imports.
“The NFAC implemented the MAV as we are still in the transition period toward tariffication,” she said. “The EO 23, which the President issued, still allows us to import the [805,200 MT via MAV] until such time a tariffication law is passed.” The NFA official added this MAV importation will not be covered by a rice-tariffication law, should one be passed in the middle of the scheme’s implementation.
The NFA is still implementing its 2017 MAV rice importation program with its second phase of delivery starting on June 1 until August 31.
Auction
For this year’s round of MAV importation, which will run until the early part of 2019, the NFA would be implementing an electronic-based auction for the import volume allocation among interested and eligible parties. “There is a big difference from last year’s MAV guidelines. This year the [interested parties] would be bidding for the allocation [of volume] through service fees,” Dansal explained.
“They will be bidding for the service fee. Therefore, [the private sector] will be competing in terms of service fee wherein the highest [bidder wins],” Dansal added.
The NFAC will create an auction committee to oversee the whole process, with representatives from the National Economic and Development Authority, Bureau of the Treasury, Bangko Sentral ng Pilipinas, Office of the President and the Department of Agriculture.
The NFAC has scheduled the auction on June 14.
“[Compared to last year’s MAV procedures] we feel that the [two] procedures are only the same in terms of transparency. But here, you will see the improvement of the procedure and that is what the NFA Council is looking at,” Dansal said.
“We have improved the system and made it easier and convenient for the participants of the importation program. Because this is electronic already, we are avoiding the physical contact [between importers and government agencies],”
she added.
Dansal disclosed that the NFAC will meet on May 30 to finalize the system for the auction.
All interested private traders and importers will be screened by a MAV prequalification team to be constituted by NFA Administrator Jason L.Y. Aquino in order to become eligible to participate in the auction.
One of the eligibility requirements is that the “total net worth of the applicant shall be at least 10 percent of the total cost of the quantity intended to be imported.”
“If the total net worth of the applicant is less than 10 percent but not lower than 5 percent of the total cost of the quantity to be imported, the applicant may secure Bank Guarantee or Credit Line from a reputable Universal/Commercial Bank equivalent to the total value of the volume intended to be imported,” the guidelines read.
All the qualified applicants would be issued with an Eligibility to Bid status once they have been approved by Aquino, according to the guidelines. “Applicants issued with Eligibility to Bid shall open an account with LBP and deposit an amount equivalent to the volume indicated in the Eligibility to Bid multiplied by the minimum service fee prescribed in Section VII.3,” the guidelines read. Eligible participants are given three working days to post their payment.
The NFAC has set the minimum service fee or bid price for the auction at P250 per MT, with bid offer increments of P250 per MT.
“The bid offer shall be for at least the minimum volume and shall not exceed thee maximum volume prescribed in item I.2,” according to the guidelines. “The volume for each bid offer shall be in multiples of 500 MT.”
Under the guidelines, the NFAC divided the 805,200 MT volume among farmer organizations (FOs) and non-FOs, which include corporations, partnerships, single proprietorship and joint ventures.
The FOs would have an available volume to import of about 161,040 MT, or 20 percent of the total MAV volume, while the remaining 80 percent, or about 644,160 MT, will be allocated to non-FOs.
An FO would only be allowed to import a minimum of 500 MT and not more than 5,000 MT, while non-FOs could apply to import at least 1,000 MT up to 50,000 MT.
Dansal explained that they came up with the 20-80 volume allocation for FOs and non-FOs “based on the history of previous availments” by the respective groups under the MAV importation scheme.
Furthermore, the NFAC also allocated the 805,200 MT volume among Luzon, the Visayas and Mindanao, “in proportion to the 2018 national daily food consumption requirements” of the three main islands. This, Dansal noted, is to ensure that private traders will supply the rice requirement of the respective areas.
The NFAC has created 48 lots with a corresponding maximum importation volume together with its source country and designated island of delivery.
Image credits: Nonie Reyes